Eagle Materials Inc (EXP)

Eagle Materials Inc's liquidity ratios provide valuable insights into the company's ability to meet its short-term obligations.

1. Current Ratio: The current ratio shows the company's ability to cover its short-term liabilities with its current assets. Over the period analyzed, Eagle Materials Inc's current ratio ranged from a high of 3.98 in September 2020 to a low of 2.13 in March 2022. The current ratio has generally been above 2, indicating that the company has had a strong ability to cover its short-term obligations with current assets.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Eagle Materials Inc's quick ratio fluctuated over the period, with a peak of 3.02 in June 2021 and a low of 0.96 in December 2024. The quick ratio generally stayed above 1, indicating that the company has been able to cover its short-term obligations without relying on selling inventory.

3. Cash Ratio: The cash ratio is the most stringent measure of liquidity, focusing only on cash and cash equivalents to cover short-term liabilities. Eagle Materials Inc's cash ratio fluctuated over the period, from a high of 2.03 in June 2021 to a low of 0.07 in March 2023. The company's cash ratio generally remained above 0.1, indicating it had the ability to cover a portion of its short-term obligations with cash on hand.

Overall, the liquidity ratios for Eagle Materials Inc demonstrate a generally strong ability to meet short-term obligations with current assets, with the current ratio consistently above 2, the quick ratio mostly above 1, and the cash ratio above 0.1 for the most part. However, there have been some fluctuations in these ratios over time, reflecting changes in the company's liquidity position.

---

Additional liquidity measure

The cash conversion cycle (CCC) of Eagle Materials Inc has fluctuated over the past few years, indicating changes in the company's efficiency in managing its cash flow.

From June 30, 2020, to March 31, 2022, the CCC decreased steadily from 128.11 days to 69.43 days, reflecting improvements in the company's ability to convert its resources into cash. However, there was a slight increase to 76.99 days by June 30, 2022.

Subsequently, the CCC fluctuated within a range of 65.56 days to 97.18 days between September 30, 2022, and June 30, 2024. This variability could suggest changes in the company's operating cycle or how efficiently it manages its inventory, receivables, and payables during this period.

By March 31, 2025, the CCC increased to 101.50 days, indicating a longer cash conversion cycle compared to previous periods. This could be a signal of potential challenges in managing working capital effectively, which might require further evaluation to identify underlying reasons for the increase in the CCC.

Overall, analyzing the trend of the CCC can provide insights into Eagle Materials Inc's operational efficiency and effectiveness in managing its cash flow, which are crucial aspects in assessing the company's financial health and performance.